India. ED plans to freeze Vijay Mallya’s shares in listed companies

As per sources, Enforcement Directorate is planning ways to ensure that transactions such as the one industrialist Vijay Mallya struck with Diageo for Rs 500 crore does not take place in future. ED will shortly ask national depositories to freeze the shares owned by Mallya in listed companies.

ED has already informed market regulator Securities and Exchange Board of India about the share freeze. It will write to the National Securities Depository Limited and Central Depository Service Limited, the two national depositories.

As of now Mallya holds stakes in United Breweries Ltd, United spirit limited, and Mangalore Chemicals and Fertilizers Ltd.

ED does not want a USL-Diageo repeat

ED is looking to ensure that no big deals or transactions, such as the USL-Diageo one, takes place in near future. Earlier in February, Mallya had reached a Rs 500-crore deal with Diageo, to whom he had sold controlling stake in USL in a multi-billion dollar deal, to step down from the chairman's post of the liquor company.

Mallya's holding company UB Holdings now has a 4 per cent stake in United Spirits. He is no longer the largest shareholder in United Breweries, and has lost management control of it.

As of now Mallya still own 32.4 per cent of United Breweries (Heineken, which acquired S&N owns more, around 37.5 per cent), four per cent of United Spirits and 22 per cent of Mangalore Chemicals. More than half the shares in United Breweries and United Spirits are pledged to UB Group lenders.

Forensic investigation ordered on MCFL

As per sources the board of MCFL, which Zuari Fertilizer & Chemicals took over last year after taking control from Mallya, had appointed Ernst & Young LLP to do a forensic investigation into the Rs 200-crore investment MCFL had made in Bangalore Beverages Ltd so that any possible fraud can be ruled out.

The auditors are also asked to look into various advances made by MCFL to Mallya's flagship UBHL, of which a sum of Rs 16.68 crore was outstanding as of March 31, 2016. Bangalore Beverages is a step-down subsidiary of UBHL and is facing liquidity crunch. The audit found that these transactions may have involved irregularities and elements of mismanagement in the company.